Wednesday, December 30, 2009

[The Life of Shaun #377] A Ponzi scheme that works

A bit off-topic, but the Economist had two articles that I know many of you would be keen on, so I wanted to share.

This first is a reminder that, hard as it is to believe sometimes, there are some things America does right. I've told people here that I believe even if I live the rest of my life here, I'll always be considered an American. However, in America, if you're a legal (very important distinction) immigrant, the attitude is "You used to be X, but you're American now."

AT ONE of the many Korean restaurants in Annandale, Virginia, a waitress cracks a raw egg into a sizzling tofu-and-oyster stew. Tables buckle under heaps of chili-, garlic- and cabbage-themed side dishes. Every customer is of Korean origin. Is this a sign that Korean immigrants are failing to assimilate in America?

Far from it. A mother addresses her college-age daughter in Korean; the daughter replies in English. A muscular man with a buzz cut reads a Korean newspaper; his T-shirt proclaims, in English: "Support our Troops".

Across the highway, in a building that houses several Korean businesses, Joshua Lee sits on a sofa and explains why he likes living in America. He grew up poor: his father was a day labourer. He did his military service on an American base in Seoul, where he polished his English and learned to like hot dogs. He moved to America in 1990, when he was 27, to study theology in Kentucky. He painted houses to support himself.

He met his wife, a Korean-American, and moved to northern Virginia, home to a hefty cluster of Korean-Americans. Eventually, he found a job writing for a Korean-language newspaper about Korean-American issues.

When he arrived, Mr Lee was astonished by how rich nearly everyone was. He recalls his first dinner with Americans: the huge bowls and immense portions. He was startled to see lights left on in empty rooms. He is still impressed: "The roads are so wide, the cars so big, the houses so large—everything is abundant," he says.

Yet this is not why he came, and it is not why he stayed and became a citizen. For Mr Lee, America is a land that offers "the chance to be whatever you want to be". More prosaically, it is a place where nearly any immigrant can find a niche.

Mr Lee's niche is an agreeable one. His suburb has safe streets, spacious backyards and good schools. He eats Korean food every day, but not for every meal. He attends a Baptist church where services are in Korean, but the Sunday-school classes are in English. He retains what he loves about his native culture—the work ethic, language, spicy cabbage—while shrugging off the rest.

For example, he never liked the way his neighbours in Korea stuck their noses into each other's business. Everyone knew how you were doing in school. You could not get a good job without connections. There was constant social pressure not to lose face. When Mr Lee went back to visit, he remembers slipping into the old straitjacket. He wanted to pop out to the corner shop, but realised he would have to put on a smart shirt and trousers, despite the intense humidity. What would the neighbours think if they saw him in shorts and flip-flops? In America, no one cares.

In Korea, he says, to express an unusual opinion is to court isolation. In America, you can say what you think. To relax, Mr Lee listens to Rush Limbaugh and Sean Hannity, two combative right-wing pundits. "Maybe you don't like these people, but I really [do]," he says.

Because America is so big and diverse, immigrants have an incredible array of choices. The proportion of Americans who are foreign-born, at 13%, is higher than the rich-country average of 8.4%. In absolute terms, the gulf is much wider. America's foreign-born population of 38m is nearly four times larger than those of Russia or Germany, the nearest contenders. It dwarfs the number of migrants in Japan (below 2m) or China (under 1m). The recession has dramatically slowed the influx of immigrants and prompted quite a few to move back to Mexico. But the economy will eventually recover and the influx will resume.

No matter where an immigrant hails from, he can find a cluster of his ethnic kin in America

Nearly all Americans are descended from people who came from somewhere else in the past couple of centuries. And the variety of countries from which immigrants come—roughly all of them, and usually in significant numbers—is unmatched. No matter where an immigrant hails from, he can find a cluster of his ethnic kin somewhere in America. In fact, he is probably spoilt for choice. If he wants to live in a suburb, eat Korean food and listen to fire-and-brimstone sermons in Korean, he can do so in northern Virginia. If he prefers an urban and secular Korean lifestyle, he can try Boston or San Francisco. If he craves Ethiopian food, Amharic radio and lots of gay clubs, Washington, DC, may suit him. And so on.

You can find welcoming clusters of ethnic minorities in other rich countries, but not nearly as many. In a European country, if you want Korean food and a particular denomination of Korean church, you might find it in the capital but you will struggle in the suburbs. In America, it is easier to find just the niche you want: Polish or Vietnamese, metropolitan or exurban, gay or straight, Episcopalian or Muslim, or any combination of the above.

You have a choice of weather and landscape, from snowy Alaska to baking Texas, from the mountains of Colorado to the forests of Maine. Northern Virginia, where Mr Lee lives, has the same climate as his homeland: winter is freezing, summer is muggy, autumn is delightful and spring brings cascades of cherry blossoms.

Consider another example. Dennis Downing, an Englishman, moved to America for the fox-hunting. A professional huntsman, he cares for the hounds that hunt the fox during a traditional hunt. (Everyone else is merely there for the ride.) He has done this all his working life.

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Gone to the dogs since they moved in

In 1997 Britain elected a government that promised a vote on banning the sport and Mr Downing, seeing the writing on the wall, left the next year. (Fox-hunting was eventually banned in 2004.) After three years with a hunt in Alabama, he moved to Virginia, where English-style fox-hunting has been popular since George Washington's day. He now works with the Blue Ridge Hunt and lives in the beautiful Shenandoah valley. He likes the weather, the space and the freedom to hunt.

That freedom is secure. America has 50 states with 50 sets of laws. Virginia will never ban hunting, but even if it did, there are 49 other states that won't. In America, people with unusual hobbies are generally left alone. And power is so devolved that you can more or less choose which rules you want to live under.

If you like low taxes and the death penalty, try Texas. For good public schools and subsidised cycle paths, try Portland, Oregon. Even within states, the rules vary widely. Bath County, Kentucky is dry. Next-door Bourbon County, as the name implies, is not. Nearby Montgomery County is in between: a "moist" county where the sale of alcohol is banned except in one city. Liberal foreign students let it all hang out at Berkeley; those from traditional backgrounds may prefer a campus where there is no peer pressure to drink or fornicate, such as Brigham Young in Utah.

People move for a variety of reasons. Alejandro Mayorkas, the head of the United States Citizenship and Immigration Services, cites two. People come to America, he says, either because they yearn for freedom or because they are fleeing something. That something could be a civil war, or it could be a culture that irks them. In Ayaan Hirsi Ali's case, it was both.

She was born in Somalia. As a young girl she was circumcised. "I heard it, like a butcher snipping the fat off a piece of meat," she recalls. Her grandmother taught her to expect men to be violent. If attacked, she told her to duck behind the man, reach up inside his sarong, grab his testicles and crush them.

Ms Hirsi Ali grew up strong-willed. She fled from Somalia's civil war, and then from an arranged marriage. She sought asylum in the Netherlands, a country that she found shockingly nice. The policemen were polite and helpful, instead of demanding bribes with menaces. The government gave refugees room and board. "Where did they get the money from?" she wondered, "Why didn't it run out?"

She quickly learned Dutch and found work as an interpreter. In this job, she visited shelters for battered women, where she noticed that nearly all the victims were Muslims. These women seldom pressed charges against their violent husbands. The social workers would ask: "Do you have family here? Can they help you?" The women would reply: "But they support my husband, of course!" This infuriated Ms Hirsi Ali: "I knew that many Dutch women were abused, too. But their community and their family didn't approve of it."

She began to campaign against domestic violence. She became a member of parliament, and won a dangerous kind of fame as an ex-Muslim apostate. With a Dutch filmmaker, Theo van Gogh, she made a short film about what she saw as the oppression of women under Islam. An outraged fanatic murdered van Gogh and stabbed into his chest a letter to Ms Hirsi Ali, promising to kill her, too. So she moved to America, where she is not famous. She keeps sensibly quiet about where she lives, but she can travel and shop without the constant fear of death.

Speaking in Dallas, she praises the intellectual freedom in America. In the Netherlands, she says, think-tanks are typically subsidised by the government and tied to a political party. This makes them timid, she believes. If an idea sounds too controversial, they shy away from it. For example, she had a theory that government-funded Muslim schools in the Netherlands were fostering self-segregation, and asked if they should be closed. No one wanted to listen, she says; her colleagues feared appearing racist.

In America swarms of privately funded think-tanks represent almost any view you can imagine. Their response to hard questions is more serious, she says. People ask if your hypothesis is true, and then suggest ways to raise the money to find out. In America, Ms Hirsi Ali found the funds to set up a foundation to study violence against Muslim women. No one has a clue how common this is in America. She means to find out.

She admits that before visiting America she had a negative view of the country. Listening to her Dutch friends, she assumed that Americans were fat, loutish, naive and sexually repressed. "But then I came here and found it was all false," she smiles.

Outsiders sometimes assume that it is hard to be an outspoken atheist in a devout country such as America. Ms Hirsi Ali thinks it is easy. Many Christians ask if she is a believer. When she replies no, she says "they don't try to kill me. They say they'll pray for me".

Besides Somalia and the Netherlands, Ms Hirsi Ali has lived in Ethiopia, Kenya and Saudi Arabia. Of all these places, she considers America to be the easiest place to assimilate. She has her niche, hanging out with "nerdy academics" and eating Japanese food. Unlike Mr Lee, she is more or less divorced from her native culture. But that works just fine in America. "I'm surprised how fast complete strangers will invite you into their houses," she says. Asked what she dislikes about her new home, she mentions that the air-conditioning is too cold.

Migration matters. Economic growth depends on productivity, and the most productive people are often the most mobile. A quarter of America's engineering and technology firms founded between 1995 and 2005 had an immigrant founder, according to Vivek Wadhwa of Harvard Law School. A quarter of international patent applications filed from America were the work of foreign nationals. And such measures ignore the children of immigrants. Jeff Bezos, the founder of Amazon, is the stepson of a man who fled Cuba at the age of 15 and arrived without even a high-school diploma.

Richard Florida, the author of such books as "The Flight of the Creative Class" and "Who's Your City?", argues that countries and regions and cities are engaged in a global battle for talent. The most creative people can live more or less where they want. They tend to pick places that offer not only material comfort but also the stimulation of being surrounded by other creative types.

This makes life more fun. It also fosters technological progress. When clever people cluster, they can bounce ideas off each other. This is why rents are so high in Manhattan. Robert Lucas, a Nobel economics laureate, argues that the clustering of talent is the primary driver of economic growth.

So a country's economic prospects depend in large measure on whether it is a place where people want to be. Desirable destinations draw talented and industrious migrants. Less desirable ones suffer a brain drain. Desirability is tricky to measure, however.

People cannot vote freely with their feet. No rich country allows unlimited immigration, and the rules vary a lot, so it is impossible to know which country is the most attractive to the largest number of people. But there are reasons to believe that America ranks at or near the top.

Mr Florida and Irene Tinagli of Carnegie Mellon University compiled a "Global Creativity Index", which tries to capture countries' ability to harness talent for "innovation...and long-run prosperity". The index combines measures of talent, technology and tolerance. America comes fourth, behind Sweden, Japan and Finland. You could quarrel with the methodology. America comes top on certain measures, such as patents per head and college degrees, but it is deemed less tolerant than other countries in the top ten. This is because the index rewards "modern, secular" values and penalises Americans for being religious and nationalistic.

This is a mistake. Some religious countries are indeed intolerant, but America is not one of them, as Ms Hirsi Ali attests. And for many talented people, such as Mr Lee, America's vibrant and varied religious scene makes the country more attractive, not less.

Michael Fix of the Migration Policy Institute, a think-tank, observes that religion has a strong effect on who comes to America. For example, although Muslims slightly outnumber Christians in Nigeria, Nigerian immigrants to America are 92% Christian and only 5% Muslim. Christians are about a quarter of the South Korean population, but four-fifths of Korean immigrants in America are Christian. Migrants from the Middle East and North Africa are mostly Muslim, but a hefty 28% are Christian and 10% are Jewish.

Christians and Jews are drawn to America in part because they know it is an easy place to be Christian or Jewish. They don't face persecution, as they might in the Middle East. Nor do they face derision, as they might in more aggressively secular parts of Europe. Also, churches create networks. Migrants typically go where they already know people, and often make contact through a church.

It is also a mistake to rate Americans as less tolerant because they are nationalistic. Americans may have an annoyingly high opinion of their country, but theirs is an inclusive nationalism. Most believe that anyone can become American. Almost nobody in Japan thinks that anyone can become Japanese, yet Japan is rated more "tolerant" than America. This is absurd.

Not everyone thinks that immigration makes America stronger. Most of the Republicans who ran for president in 2008 promised a tough line on the illegal sort. Tom Tancredo, the angriest of them, describes America's porous borders as a "mortal danger", though he is the grandson of immigrants from Italy. Pat Buchanan, another former presidential candidate, wrote a book subtitled: "The Third World Invasion and Conquest of America".

Some worry about illegal immigration because they favour the rule of law. "When there are people in Mexico City waiting in line and paying their fees and doing everything right, and they are having to wait for years, and then other folks are coming in without waiting in line—that's not fair," said Barack Obama in October. But many Americans also think that too many legal immigrants are admitted.

Some fear that open borders make it easier for terrorists to sneak in. Others worry that immigrants overload schools and hospitals, or drag down the wages of the native-born. Environmentalists fret that immigration drives population growth, which aggravates urban sprawl, pollution and global warming.

The argument that stirs the hottest passions, however, is cultural. The late Samuel Huntington, a Harvard academic, argued that Hispanic immigrants, because they are so numerous, will not assimilate. Rather, they threaten to "divide the United States into two peoples, two cultures and two languages" and "[reject] the Anglo-Protestant values that built the American dream".

Some look at the great multi-ethnic experiment and see a society on the brink of breakdown

Mark Krikorian, the author of "The New Case Against Immigration: Both Legal and Illegal", points out that modern immigrants can call home every day. This, he says, means they are less likely to give up their old ties and become American. He complains that the American elite no longer thinks American culture is worth preserving, and therefore no longer insists that immigrants imbibe it. He also predicts that mass immigration from poor countries is incompatible with the welfare state—too many newcomers will bankrupt it.

AP

Some outsiders look at America's great multi-ethnic experiment and see a society teetering on the brink of violent breakdown. "White America is in decline," writes Gary Younge, a left-wing British journalist. He adds: "Never having considered the unearned privilege of being white and American, all they can see are things being taken away from them. Never having considered solidarity with blacks and Latinos, they see them not as potential allies but as perpetual enemies."

Nearly all this gloom is misplaced. It is possible that unskilled immigrants hurt the wages of unskilled locals. George Borjas, a Harvard economist, estimates that native workers' wages decline by 3% or 4% for every 10% increase in immigrants with similar skills. But others, such as David Card of the University of California, Berkeley, have found little or no impact. Gianmarco Ottaviano of the University of Bologna and Giovanni Peri of the University of California, Davis, find that nearly 90% of native-born American workers actually enjoy higher wages because of immigration. Many immigrants bring new skills and ideas, spend money, pay taxes and employ natives.

Mass immigration may be hard to combine with a generous welfare state, but this argument applies more to Europe than to America. In America it is hard for an able-bodied adult male to do anything more than subsist on welfare. So immigrants work, which means they are seldom much of a drain on the public purse, and they have no choice but to assimilate. People who work together need to get on with each other, so they generally do.

Because immigrants have to work, America does not have ghettos full of permanently jobless and alienated young immigrants, as in France, for example. This is perhaps why, although America has a high murder rate—three times that of Britain—its immigrants rarely riot. They are too busy earning a living. America has not in recent years seen anything like the immigrant riots that torched the Paris suburbs in 2005. The closest parallel, the Los Angeles riots of 1992, sprang from the unique grievances of the one large ethnic group whose ancestors did not voluntarily migrate to America: African-Americans.

Some of America's talk-show hosts are quite vicious, but no openly xenophobic politician can attract the kind of support that France's Jean-Marie Le Pen did in 2002, or that Austria's Jörg Haider did before he got drunk and killed himself in a car crash. Political rhetoric in America is often heated but almost never leads to violence. Ms Hirsi Ali recalls watching the vice-presidential debate on the television last year with friends in New York. Her Democratic friends thought Sarah Palin was ghastly. Her Republican friends were equally appalled by Joe Biden. Tempers rose so high during the election campaign that Ms Hirsi Ali thought the country might come to blows. But then polling day passed, and the tension was gone. She saw her Republican and Democrat friends eating cupcakes together. Americans get passionate about politics, she observes, but the next day they get on with their lives.

As Mr Krikorian concedes, the fear that new immigrants are disagreeably different is not new. In 17th-century Massachusetts, one group of English Protestants (the Puritans) banished another group of English Protestants (the Quakers) and even hanged some of those who returned. Benjamin Franklin doubted that German immigrants would ever assimilate. "Why should the Palatine Boors be suffered to swarm into our settlements?" he asked, adding that they "will never adopt our Language or Customs". Today, there are 50m German-Americans, hardly any of whom speak German. Indeed, they have intermingled and intermarried so much that they are barely noticeable as a separate group.

The doomsayers about immigration have always been wrong before. It is a fair bet that they are wrong now. America has lost none of its capacity to absorb newcomers. A recent survey by Public Agenda, a polling group, asked immigrants in America how long it took them to feel comfortable and "part of the community". Some 77% said it took less than five years. Only 5% said they had never felt that they fitted in. In contrast 58% of people of Turkish descent in Germany say that they feel unwelcome, and 78% do not feel that Angela Merkel is their chancellor.

America is a uniquely attractive place to live: a lifestyle superpower. But it cannot afford to be complacent, for three reasons. First, other places, such as Australia, Canada and parts of Western Europe, have started to compete for footloose talent. Second, rising powers such as India and China are hanging on to more of their home-grown brains. There is even a sizeable reverse brain drain, as people of Indian or Chinese origin return to their homes. But neither India nor China attracts many completely foreign migrants who wish to "become" Indian or Chinese.

Third, since September 11th 2001 the American immigration process has become more security-conscious, which is to say, slower and more humiliating. Even applicants with jobs lined up can wait years for their papers. Many grow discouraged and either stay at home or try their luck somewhere less fortress-like.

President Obama promises immigration reform: stricter border controls but also a path to citizenship for those in the country illegally. George Bush promised the same thing, but Congress blocked him. Mr Obama has his work cut out to avoid that fate; and although he is the son of a Kenyan Harvard student, he has done little to make the system less cumbersome for skilled migrants.

"The United States alone among great powers will be increasing its share of world population over time"

The stakes are high. Immigration keeps America young, strong and growing. "The populations of Europe, Russia and Japan are declining, and those of China and India are levelling off. The United States alone among great powers will be increasing its share of world population over time," predicts Michael Lind of the New America Foundation, a think-tank. By 2050, there could be 500m Americans; by 2100, a billion. That means America could remain the pre-eminent nation for longer than many people expect. "Relying on the import of money, workers, and brains," writes Mr Lind, America is "a Ponzi scheme that works."

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